SAP Nation 3.0 excerpts: Chapter 4 A Massive Pivot

My new book is now available to buy here in print version, and in the Kindle eBook version. As with my earlier books, I am excerpting roughly 10% of the 400 page book in a series of posts on my two blogs.

In this chapter, I summarized a wide range of conversations I had with SAP execs and watchers from trends in developer communities, to UX to CX to SAP openness. I saw so much change that I am not that surprised with recent layoffs and executive moves.

"Cohen’s argument about retiring customizations makes a lot of sense, but bear in mind many of those modifications were written a decade ago or even further back. Will standard SAP software reflect 2009 practices or that of 2019? In the last decade, the shop floor has seen automation in the form of robotics, wearables, 3D printers, etc. As we will see later, global companies are moving plants across borders at startling rates and need agility they did not a decade ago. In fairness to SAP, Oracle and Infor have the same challenge. Also, many customers don’t want to make big moves in ECC and then make a second transition to S/4. They would prefer a single move.

Cohen talked about a multinational customer who asked, “We love your public cloud but you have to offer us 189 countries localization out of the box.” “I told him, ‘I have only 64 today.’”

Customers don’t want to regress from functionality in ECC and other current products. And they don’t want multiple projects and change initiatives. As fast as he and SAP are moving, many of his customers want him to move faster."

"Atzberger is fighting plenty of cynicism. Reaction from a couple of customers to the C/4 announcement: “five years too late” and “CEO McDermott arrived at SAP from Siebel 15 years ago … what took him so long?” Several analysts reacted to my post, “Salesforce is Vulnerable” by adding “Yes, but not by SAP.” One snarkily wondered if SAP’s branding team had vetted the fact that C4 is a plastic explosive.

SAP is going after the CX market differently this time. It has lots of differentiated features, especially through its acquisitions of CallidusCloud, Coresystems, Gigya and hybris. The sales function is being redefined with Callidus’s revenue recognition and sales commission functionality. Meanwhile, hybris Commerce, CPQ and NBA functionalities are much more relevant for newer outcome-based business models and a world where digital and physical are merging. The Coresystems acquisition offers customers an Uber-like plat- form to find available field service technicians in real time. So a customer like Siemens can use SAP functionality on a per-user basis for its own techs and pay for a marketplace for crowdsourced techs on an occurrence basis. Leonardo IoT capabilities allow for new service models as industrial assets get smarter and allow for more predictive versus scheduled maintenance. The Gigya acquisition, with its customer identity and access management capabilities, is more relevant for a world which is moving past email blasts and overused cook- ies. SAP CEO McDermott stood shoulder to shoulder with Shantanu Narayen, CEO of Adobe, and Satya Nadella, CEO of Microsoft, to announce their Open Data Initiative. It was also a vivid display of “coopetition”: Adobe and Microsoft compete with SAP on many a CX opportunity."

" The world of designing the user experience is mind-blowingly complex — mobile trends on iOS and Android; social/ collaboration trends driven by Facebook Workplace, Slack and others; digital assistants like Alexa, Siri and SAP’s own CoPilot.

Listening to Cabahug, you see that expectations change dramatically as you move within an enterprise. Customer-facing marketers are far more UX-demanding than workers on the shop floor. As you move around the world, you have to reflect expectations of chat and emojis common in China."

” Grassl agrees:

“When I talk to my peers at developer relations in other companies, I get the same feedback. It’s a very tough market to get and keep developers interested in your products.”

He then countered with the following:

“Let’s start with who do we target. Does it make sense for us to go after a broad, less-professional developer? It doesn’t help us to get a developer who knows HTML and can create a small app for a web page. We drive programs to show them the [enterprise] career path — but it also requires work on their side, to learn and build up the skills.

At SAP, we accelerated our focus on developer relations about five years back. There are a lot more things available from SAP than in the past. Also, we use the term “developer” very broadly at SAP. It includes sys admins, technical people and business user-type developers. We have focused on three main activities."

" Matthias Steiner, Head of SCP Evangelism, explained the move to me:

“We are articulating that this is not your grandfather’s ABAP. It still uses a lot of the common technologies that have been floating around within the SAP ecosystem for a while, like HANA core data services. Of course, we recommend using UI5 and Fiori, so it’s just a stepping stone. It’s just making it a little bit easier for our one million ABAP developers as they up-skill.

We still believe that for all those hesitant customers, the best way to get started with cloud is this whole topic of user experience, because the elephant in the room is data, security and information privacy. If you leave the data where it is and just use the cloud as the catalyst to expose this data to the outside world, make it accessible to the end users, and typically this is what we do with Fiori-type applications, then you can familiarize with the technologies. For these things, pick something which is not mission-critical, so you have a little bit of time and no pressure to familiarize with cloud.”

"Klein is now using that experience to help market S/4 and SAP cloud properties to other global companies seeking similar transformations. He is on a quest to help them become what SAP calls “intelligent enterprises.”

“We are tackling the whole value chain at SAP. We are looking end to end, looking at marketing, sales, finance, service and support, cloud operations and the cloud infra- structure. That’s the first aspect of our transformation. Next, we are infusing machine learning, IoT, predictive analytics and these new technologies to bring the intelligence into play.

It’s about adapting business processes to the new digital age. It’s about fixing the data architecture. Last but not least, it’s about change management, and taking the people with you. In the end, everything that we do in the cloud impacts our 90,000 employees and our 400,000 customers.""

" Fanelli says she has the opportunity to move partners from a historic focus on reselling and implementations towards a broader role in helping customers become Intelligent Enterprises. Partner performance will be measured on customer lifetime value and their success.

SAP has a long history of building similar apps ecosystems around Fiori apps, HANA apps, mobile apps, etc. This time around, the customer access is much more digital. SCP leverages a lot more open source, and the barriers to partner participation appear lower.

At this point, it is a fledgling in terms of revenues for both the ISVs and for SAP (Fanelli says focus is adoption prior to monetization), but there is significant promise.

This time, she has new platforms to benchmark against. In the last decade, Apple has generated tens of billions of dollars in revenues for its partners and for itself from its iOS store. Amazon with its fulfillment engine has done the same. She can help SAP dream much bigger in this round."

" A few months earlier, I had seen him next to Jon Bon Jovi at another event. The hugely popular musician opened up about going through a very dark, personal phase. He was openly vulnerable. McDermott, in contrast, was positive as ever, quoting from Teddy Kennedy’s “the Dream shall never die” speech. There was no mention of his own personal tragedy.

It’s not just this accident; the man has also navigated being a cross-border CEO."

" I am only describing the tip of the spear — these executives are just a small handful of the 95,000 worldwide SAP employees. The pivot at SAP in the last five years has truly been massive. And the pivot will accelerate, as SAP announced in January

2019 a restructuring where it “will reassign some employees and offer early retirement to others, but still expects its overall head count to exceed 100,000 by the end of 2019.”

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SAP Nation 3.0 excerpts: Chapter 4 A Massive Pivot

My new book is now available to buy here in print version, and in the Kindle eBook version. As with my earlier books, I am excerpting roughly 10% of the 400 page book in a series of posts on my two blogs.

In this chapter, I summarized a wide range of conversations I had with SAP execs and watchers from trends in developer communities, to UX to CX to SAP openness. I saw so much change that I am not that surprised with recent layoffs and executive moves.

"Cohen’s argument about retiring customizations makes a lot of sense, but bear in mind many of those modifications were written a decade ago or even further back. Will standard SAP software reflect 2009 practices or that of 2019? In the last decade, the shop floor has seen automation in the form of robotics, wearables, 3D printers, etc. As we will see later, global companies are moving plants across borders at startling rates and need agility they did not a decade ago. In fairness to SAP, Oracle and Infor have the same challenge. Also, many customers don’t want to make big moves in ECC and then make a second transition to S/4. They would prefer a single move.

Cohen talked about a multinational customer who asked, “We love your public cloud but you have to offer us 189 countries localization out of the box.” “I told him, ‘I have only 64 today.’”

Customers don’t want to regress from functionality in ECC and other current products. And they don’t want multiple projects and change initiatives. As fast as he and SAP are moving, many of his customers want him to move faster."

"Atzberger is fighting plenty of cynicism. Reaction from a couple of customers to the C/4 announcement: “five years too late” and “CEO McDermott arrived at SAP from Siebel 15 years ago … what took him so long?” Several analysts reacted to my post, “Salesforce is Vulnerable” by adding “Yes, but not by SAP.” One snarkily wondered if SAP’s branding team had vetted the fact that C4 is a plastic explosive.

SAP is going after the CX market differently this time. It has lots of differentiated features, especially through its acquisitions of CallidusCloud, Coresystems, Gigya and hybris. The sales function is being redefined with Callidus’s revenue recognition and sales commission functionality. Meanwhile, hybris Commerce, CPQ and NBA functionalities are much more relevant for newer outcome-based business models and a world where digital and physical are merging. The Coresystems acquisition offers customers an Uber-like plat- form to find available field service technicians in real time. So a customer like Siemens can use SAP functionality on a per-user basis for its own techs and pay for a marketplace for crowdsourced techs on an occurrence basis. Leonardo IoT capabilities allow for new service models as industrial assets get smarter and allow for more predictive versus scheduled maintenance. The Gigya acquisition, with its customer identity and access management capabilities, is more relevant for a world which is moving past email blasts and overused cook- ies. SAP CEO McDermott stood shoulder to shoulder with Shantanu Narayen, CEO of Adobe, and Satya Nadella, CEO of Microsoft, to announce their Open Data Initiative. It was also a vivid display of “coopetition”: Adobe and Microsoft compete with SAP on many a CX opportunity."

" The world of designing the user experience is mind-blowingly complex — mobile trends on iOS and Android; social/ collaboration trends driven by Facebook Workplace, Slack and others; digital assistants like Alexa, Siri and SAP’s own CoPilot.

Listening to Cabahug, you see that expectations change dramatically as you move within an enterprise. Customer-facing marketers are far more UX-demanding than workers on the shop floor. As you move around the world, you have to reflect expectations of chat and emojis common in China."

” Grassl agrees:

“When I talk to my peers at developer relations in other companies, I get the same feedback. It’s a very tough market to get and keep developers interested in your products.”

He then countered with the following:

“Let’s start with who do we target. Does it make sense for us to go after a broad, less-professional developer? It doesn’t help us to get a developer who knows HTML and can create a small app for a web page. We drive programs to show them the [enterprise] career path — but it also requires work on their side, to learn and build up the skills.

At SAP, we accelerated our focus on developer relations about five years back. There are a lot more things available from SAP than in the past. Also, we use the term “developer” very broadly at SAP. It includes sys admins, technical people and business user-type developers. We have focused on three main activities."

" Matthias Steiner, Head of SCP Evangelism, explained the move to me:

“We are articulating that this is not your grandfather’s ABAP. It still uses a lot of the common technologies that have been floating around within the SAP ecosystem for a while, like HANA core data services. Of course, we recommend using UI5 and Fiori, so it’s just a stepping stone. It’s just making it a little bit easier for our one million ABAP developers as they up-skill.

We still believe that for all those hesitant customers, the best way to get started with cloud is this whole topic of user experience, because the elephant in the room is data, security and information privacy. If you leave the data where it is and just use the cloud as the catalyst to expose this data to the outside world, make it accessible to the end users, and typically this is what we do with Fiori-type applications, then you can familiarize with the technologies. For these things, pick something which is not mission-critical, so you have a little bit of time and no pressure to familiarize with cloud.”

"Klein is now using that experience to help market S/4 and SAP cloud properties to other global companies seeking similar transformations. He is on a quest to help them become what SAP calls “intelligent enterprises.”

“We are tackling the whole value chain at SAP. We are looking end to end, looking at marketing, sales, finance, service and support, cloud operations and the cloud infra- structure. That’s the first aspect of our transformation. Next, we are infusing machine learning, IoT, predictive analytics and these new technologies to bring the intelligence into play.

It’s about adapting business processes to the new digital age. It’s about fixing the data architecture. Last but not least, it’s about change management, and taking the people with you. In the end, everything that we do in the cloud impacts our 90,000 employees and our 400,000 customers.""

" Fanelli says she has the opportunity to move partners from a historic focus on reselling and implementations towards a broader role in helping customers become Intelligent Enterprises. Partner performance will be measured on customer lifetime value and their success.

SAP has a long history of building similar apps ecosystems around Fiori apps, HANA apps, mobile apps, etc. This time around, the customer access is much more digital. SCP leverages a lot more open source, and the barriers to partner participation appear lower.

At this point, it is a fledgling in terms of revenues for both the ISVs and for SAP (Fanelli says focus is adoption prior to monetization), but there is significant promise.

This time, she has new platforms to benchmark against. In the last decade, Apple has generated tens of billions of dollars in revenues for its partners and for itself from its iOS store. Amazon with its fulfillment engine has done the same. She can help SAP dream much bigger in this round."

" A few months earlier, I had seen him next to Jon Bon Jovi at another event. The hugely popular musician opened up about going through a very dark, personal phase. He was openly vulnerable. McDermott, in contrast, was positive as ever, quoting from Teddy Kennedy’s “the Dream shall never die” speech. There was no mention of his own personal tragedy.

It’s not just this accident; the man has also navigated being a cross-border CEO."

" I am only describing the tip of the spear — these executives are just a small handful of the 95,000 worldwide SAP employees. The pivot at SAP in the last five years has truly been massive. And the pivot will accelerate, as SAP announced in January

2019 a restructuring where it “will reassign some employees and offer early retirement to others, but still expects its overall head count to exceed 100,000 by the end of 2019.”